Market Talk
– The dollar was set to end the week close to where it started following a roller-coaster week in which currencies were tossed around by shifting risk appetite, with the market’s focus now shifting to next week’s U.S. Federal Reserve meeting.
– The number of U.S. workers filing first-time applications for unemployment benefits spiked unexpectedly to 419,000 last week, a two-month high, according to the Labour Department. The jobless claims data was soft and continues to be stubbornly elevated.
– Market participants are closely watching labour market indicators for hints as to when the Fed, expected to convene next week for its two-day monetary policy meeting, will begin discussions about hiking key interest rates from near zero.
– The euro was lower over the period at 1.1779 after the ECB pledged to keep interest rates at record lows for even longer, as widely expected. The British pound recovered from losses to trade higher at 1.3775, buoyed by the recovery in risk sentiment even with COVID-19 cases broadly on the rise.
– Gold inched higher as stocks and U.S. bond yields declined to offset a firmer dollar and restore some of bullion’s allure as a safe haven. Gold also took support from a European Central Bank pledge to keep interest rates at record lows for even longer.
Chart Focus EUR/USD
Key Points
1. Sell EUR/USD recommendation.
2. Sell EUR/USD at 1.1775. Stop at 1.1815 and profit target at 1.1705.
3. A dovish ECB and interest rate differential are both likely to weigh on the Euro dollar.
4. Price was capped by the 20EMA with both MACD and 20EMA hinting of bearish price trend ahead.
Fundamental Comments
1. A dovish ECB pledging to keep rates low for even longer is likely to keep the Euro dollar weak.
2. Interest rate differential is against the Euro dollar.
Technical Comments
1. Price was capped by the 20EMA which is also hinting of a bearish price trend ahead.
2. MACD remains bearish and is hinting of a bearish price trend ahead
Key Levels
| Support | 1.1750 | 1.1705 | 1.1665 |
| Resistance | 1.1780 | 1.1820 | 1.1850 |
Technical Overview
USD/JPY – Our view remains the same as yesterday and we are looking at a price move to 110.80 over the next couple of days. Price did not move lower than 110.06 overnight in a correction and was supported by the 20EMA. As long as price stays above the 20EMA, we are looking for a rally to 110.80. A move below 109.70 would negate our bullish view for the next few days.
| Support | 110.05 | 109.70 | 109.30 |
| Resistance | 110.40 | 110.70 | 111.15 |
AUD/USD – Price was capped by a previous support turned resistance at 0.7395. As long as price remains below 0.7410, the trend remains bearish and we are inclined to believe a decline to 0.7300 is likely over the next couple of days. Stochastic has a bearish crossover in the overbought zone tied in with our bearish price trend. MACD and 20EMA are both flat and neutral at the moment.
| Support | 0.7350 | 0.7315 | 0.7285 |
| Resistance | 0.7385 | 0.7415 | 0.7450 |
GBP/USD – Price reached a high of 1.3787 overnight and we think this could be the high and a decline to 1.3660 is likely over the next few days ahead. Stochastic is in the overbought zone and has a bearish crossover. Stochastic is hinting of a bearish price trend. MACD is neutral but 20EMA continues to be bullish. A move above 1.3790 would negate our bearish view.
| Support | 1.3740 | 1.3695 | 1.3660 |
| Resistance | 1.3785 | 1.3830 | 1.3870 |
XAU/USD – Our view remains the same as yesterday. We are looking for a move to $1824 after price seems to have made a bottom at $1792.60. Stochastic continues to rise and has not reached the overbought zone as yet. Stochastic is hinting price can go higher. MACD and 20EMA are both flat and neutral at the moment. A move below $1797 today would negate our bullish view.
| Support | 1805.05 | 1792.60 | 1784.55 |
| Resistance | 1813.40 | 1824.80 | 1833.95 |
XAG/USD – We had a sell recommendation at $25.30 yesterday which was filled when price rallied to a high of $25.47 overnight. Stochastic continues to rise but is near the overbought zone. MACD remains bearish and is hinting of a bearish trend. 20EMA is flat and neutral at the moment. We remain bearish and we would recommend keeping stop at $25.60 and profit target at $24.75.
| Support | 25.25 | 25.05 | 24.70 |
| Resistance | 25.50 | 25.80 | 26.05 |